It says company super schemes don’t stack up on three fronts and they underperform other investments.

“Employees are not stupid. They look at the performance of super funds as an investment and the vast majority of company super schemes have seriously underperformed,” Money Managers says in its latest newsletter.

One of its three arguments is the “ridiculous tax treatment” of these funds.

Money Managers says there is no other country where schemes are treated worse for tax. People in these schemes are often taxed at rates higher than their personal rate, and the funds pay tax on capital gains and income.

Its second argument is based around "poor returns."

Money Managers argues that because schemes are taxed at such high rates they don’t return as much as the employee would achieve by paying off their mortgage first.

Its final point is what it calls "wrong asset allocation".

"Many company super schemes are managed to a very conservative asset allocation because so many employees are retired or near retirement and need a high weighting to income assets."

Money Managers reckons everyone under 50 should have a weighting of at least 70% in growth assets.

Not surprisingly Money Managers says it’s better to use its masterfund or First Step products as opposed to the company scheme.

"If your employer is offering a subsidised super scheme then they should do both you and them a favour by paying you the money as salary and letting you invest it yourself with a much more attractive tax rate, especially on capital gains."

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